Currency is not a zero sum game and can have a significant impact on a portfolio, says Ela Karahasanoglu, vice-president, client portfolio manager ‒ currency and asset allocation institutional, with CIBC Asset Management. Speaking at the Benefits and Pensions Monitor’s Meetings & Events session ‘Currency Concerns and Pensions Plans,’ she said, “It might be a zero sum game if investors were in and out, but that’s not what institutional investors do. They stay in it for the long run.” Currency returns can be large and foreign currencies are a hidden gem that provide opportunities and can lower portfolio volatility. Even just deciding to hedge or not hedge can make quite a difference. Karahasanoglu said currency strategies can be applied to most institutional portfolios and improve risk-adjusted returns. Active currency management can improve returns, while not significantly changing total risk and risk relative to liabilities over the longer term.
245 Fairview Mall Drive, Suite 501, Toronto, ON M2J 4T1